In a small scale business, the fixed cost is N5,000, variable cost is N15,000 and the output is 500 units. What will be the unit cost of the goods?
Question 1 Report
In a small scale business, the fixed cost is N5,000, variable cost is N15,000 and the output is 500 units. What will be the unit cost of the goods?
Answer Details
To find the unit cost of the goods, we need to add the fixed cost and variable cost and divide by the number of units produced.
Total cost = Fixed cost + Variable cost
Total cost = N5,000 + N15,000
Total cost = N20,000
Unit cost = Total cost / Number of units produced
Unit cost = N20,000 / 500 units
Unit cost = N40.00
Therefore, the unit cost of the goods is N40.00.
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